The Evolution of Development Thought: An Economist's Overview
The Evolution of Development Thought: An Economist's Overview
The Evolution of Development Thought: An Economist's Overview
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<strong>The</strong> <strong>Evolution</strong> <strong>of</strong> <strong>Development</strong> Models/Approaches<br />
After WWII, Bretton Woods System<br />
First Generation Part I (1950 – mid-1960s)<br />
Time Axis<br />
<strong>Development</strong> Economics Rediscovered (or Newly Founded)<br />
Grand (Visionary) Models <strong>of</strong> <strong>Development</strong> Strategy<br />
Structural Transformation & <strong>Development</strong> Planning (National <strong>Development</strong> Plans)<br />
Pervasive Market Failures → Extensive Government Involvement (Structuralist, Welfare Economists)<br />
Lack <strong>of</strong> a reliable market price system.<br />
Government-led structural transformation to break Nurkse’s “vicious circle <strong>of</strong> poverty”,<br />
and to accomplish Rostow’s “take<strong>of</strong>f”.<br />
Per Capita Real Income → GDP → Capital Requirement (Capital Fundamentalism)<br />
Harrod(1939)-Domar(1946) model used to estimate capital requirement<br />
Solow Growth Model/Accounting (1957) →<br />
Y = F(K, L, t)<br />
Capital + Exogenous Technology Progress<br />
Traditional Dualism Models → Two-Sector Model (Lewis, 1954, Fei and Ranis, 1961)<br />
Farmers in developing countries are poor because they are irrational.<br />
wages ≠ marginal value product <strong>of</strong> labor
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